Forbes Asia - June 2018

BY ELAINE RAMIREZ

South Korea’s 50 Richest

Crazy for

Crypto

L

ast year was the year of cryptocurrency in South Korea.

Bitcoin, ethereum and other digital currencies took the

country by storm, some nine years at er the world’s i rst

bitcoin was mined. When we compiled our list of South Korea’s

richest last spring, cryptocurrency holdings were not on our radar.

But in researching our new list, it turns out that seven members

(right) have been busy investing in crypto. In February Forbes

ranked another Korean, Song Chi-Hyung, at No. 19 among the

world’s biggest fortunes based entirely

on crypto, but he fell short in making the

country’s top 50 in overall wealth.

South Korea emerged as the world’s

third-largest market for trading bitcoin

last year. h e country sprouted three of the

top i ve exchanges for ethereum, account-

ing for between 35% and 40% of the coin’s

global trading volume. An estimated 3

million people in a country of 50 million

had set up cryptocurrency accounts by the

end of 2017. Last October Song launched

Upbit, an exchange that counts local mobile-messenger giant

Kakao as a major investor, and it shot up to the top of the pack.

h e feverish demand, coupled with government rules that

make sending Korean won abroad cumbersome, led to a 30% to

50% premium on the purchase price of the most popular coins, a

phenomenon known as the Kimchi Premium. Traders in China—

which banned trading in digital coins last year—used South Korea

to sell crypto for i at, or government, money, leading to a massive

cash outl ow to China, according to Hong Ki-Hoon of Hongik

University’s College of Business. South Korea’s inl uence on the

global markets was so strong that when CoinMarketCap.com, a

U.S. price-tracking site, decided to remove the country’s exchanges

from its algorithms because of the Kimchi Premium in January, it

sent global markets reeling with a $100 billion loss.

h e crypto boom took of at er local investors soured on real

estate and domestic stocks. Property became less attractive as

prices and interest rates rose. At the same time, the stock-trading

business became more dii cult. In March of last year, new rules

took ef ect that required investors in derivatives such as put op-

tions to meet much tougher certii cation requirements, including

undergoing 30 hours of training and making 50 hours of simu-

lated transactions. h at turned of traders, notes Lee Seung-gun,

CEO of Viva Republica, maker of payments application Toss.

What’s more, the tech-heavy Kosdaq fell 6% in 2016. h e result

of all this: “A lot of active funds were not performing very well,

and that led to a lack of high-risk assets that were investable in the

72 | FORBES ASIA JUNE 2018

BANG JUN-HYUK: REED SAXON/AP PHOTO

KWON HYUK-BIN, NO. 8

His gaming juggernaut

Smilegate formed a

partnership in February

with local blockchain

company The Loop to

develop a crypto coin for

its gamers to use.

KIM JUNG-JU, NO. 5

Holds 83% of Korbit, South Korea’s fi rst

cryptocurrency exchange. Made his fi rst in-

vestment last September, when he paid $85

million for an initial 65% stake. His Nexon, the

country’s top gaming company, is investing

heavily in crypto.

BANG JUN-HYUK,

NO. 9

The mobile-gaming

maven said in Febru-

ary that his Netmarble

will explore blockchain

technology, leading

to speculation the

company will create a

cryptocurrency for its

games.

Song Chi-Hyung,

ranked No. 19 in

Forbes’ ranking

of largest crypto

fortunes.